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Guide to Outsourced Storage and Warehousing: What is it and What Companies is it Suitable for?

Posted by Anna Khaletskaya on 05.08.2021
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Guide to Outsourced Storage and Warehousing: What is it and What Companies is it Suitable for?

For a business that deals with material assets, the need for warehousing their goods is essential. Renting or buying a warehouse is not the only challenge of a company. It is necessary to arrange goods unloading and loading, purchase warehouse equipment, install video surveillance and security alarms, and hire staff. However, ensuring efficient warehousing and freight security without experience in this field is a challenging task. It makes sense to outsource the warehouse processes. Using storage and warehousing service, a business resolves many issues related to warehouse logistics and can be confident in the safety of the goods.

In this article, WareTeka explains what outsourced storage and warehousing are, what companies should try this service, and how a business can optimize its warehouse logistics costs using it.

What is outsourced storage and warehousing? 

Storage and warehousing services are the transfer of goods or freight to a warehouse of a third-party company for its safe storage for a specific period and a certain fee. 

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A logistics partner should ensure freight safety and its storage by the specified in an agreement condition. He is fully responsible for the preservation of all the temperature and quality characteristics of the goods that have entered his warehouse. Personal insurance of freight against damage, theft and round-the-clock security are also possible options.

A logistics provider places goods in the 3PL warehouses. These modern and well-equipped premises are equipped in such a way as to comply with the required level of lighting, humidity, and temperature conditions. The product owner does not care about the availability of the required metrics. In addition, assembling and processing of batches of goods for storage take place in the 3PL warehouse. The goods are prepared for delivery to the end consumer or can be transferred to the forwarder under the invoice, taking into account the expiration date and batch number.

This service is beneficial for companies that do not want to rent and maintain the warehouse themselves. A business pays only for the area of the warehouse space occupied by its freight. Thus, it does not overpay for the rental of unused space and does not pay utility bills. It is also unnecessary to buy equipment and hire staff.

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The price for outsourced storage and warehousing depends on the class of the warehouse, location, and conditions. Loading and unloading, processing, order picking are paid separately. Each warehouse keeps its accounting of goods, and if this system is as automated as possible, it will be a great advantage.

What services do 3PL storage and warehousing include? 

Outsourced storage and warehousing is a comprehensive service that is divided into several stages. Logistics providers can offer additional services at each of the stages. A business decides for which services it is willing to pay.

Unloading from a motor carrierIt depends on the type of goods packing. If goods are stored in pallets, they are moved by loaders. Single-item products are unloaded manually by warehouse workers. 
Acceptance of goods in the 3PL warehouseThis stage consists of a check of their actual availability and accompanying documents. If the goods arrive damaged, this must be recorded. The information about the goods is entered in a special program or table.
Goods placementEach pallet or unit is assigned its number and place in the warehouse where it will be stored. Storage can be arranged in various ways: shelf, floor, large scale, mezzanine, pallet storage.
Request for shipmentA freight owner applies and if the goods are available in a warehouse, the following stages take place.
Goods assemblingAfter receiving the request, warehouse workers pick the order. If the 3PL warehouse is automated, the assembling will be faster.
MarkingIt is a required service by many companies. At this stage, the goods are bar-coded.
Packing or repackingThis service includes modifying goods according to the standards since each type of goods must be transported differently. Also repacking is done for rebranding. Many 3PLs besides outsourced storage and warehousing provide co-packing. This service enables to save on transportation costs and purchase consumables.
Preparation for shipmentThis stage typically consists of checking the assembled goods and loading them onto the pallets. At this stage, a logistics provider prepares accompanying documentation.
Goods shipment from a warehouse It can be performed either on the client’s transport or the 3PL’s transport for delivery to the end consumer.

What companies should try outsourced storage and warehousing services?

Different companies use storage and warehousing services. It may be a business with its warehouses, that needs temporary extra space (for example, in a pick season). These are typically retail and chain stores. A big advantage is that they pay only for the necessary service at a certain time. As soon as they do not need storage for additional numbers of goods, they can refuse storage and warehousing.

This service is also beneficial for companies that do not want to invest in their warehouse infrastructure. These companies may have a limited budget and/or single or irregular orders. In such a case, it makes no sense to maintain the warehouse year-round.

The service can be used by logistics companies, which want to minimize the use of their warehouses and optimize staff work. Some transport companies offer a temporary storage service if, for example, there is a time lag between the arrival of goods and their dispatching to the store. However, only large transport companies that provide a wide range of logistics services can offer such a service. Truck drivers may leave the goods in the 3PL warehouse during their transportation. This service is necessary if several types of transport carry the goods and freight has to be consolidated before dispatching.

This service is suitable for companies and individuals during moving/repairing an office or a production hall. Companies and owners of large-scale goods such as ski or garden equipment, furniture, motorboats, may also transfer their property for outsourced storage and warehousing.

Who is responsible for freight safety while goods are stored in the 3PL warehouse?

Logistics companies that provide outsourced storage and warehousing, have increased responsibility. That means they are responsible for goods losses or damages, regardless of fault. They are not liable only in case of force majeure, if goods have specific characteristics that the providers were not warned of, or if the freight owner is himself guilty of goods damage. 

Before transferring freight for outsourced storage and warehousing, a goods owner and a provider should agree. It is a document in which one party transfers to another individual or legal entity inventory items to ensure safety for a certain period, taking into account the return of the goods to the first party.

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This agreement is concluded mainly in writing and the acceptance of the goods is confirmed by a receipt. It prescribes all the conditions – the subject (name, type, article, color, registration numbers), terms, rights, and obligations of the parties, cost, and payment procedure. If necessary, the condition of the property at the time of transfer to the warehouse is recorded by photographing.

The keeper undertakes not to touch the packaging of the goods only if this is not the purpose of maintaining it in working order. If the client does not respond to the message, for example, about outgoing unpleasant odors from the goods, warehouse workers themselves eliminate the harmful effect. If the logistics company loses or damages someone else’s property, it will be forced to compensate the owner for the damage, depending on the terms of the contract.

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The logistics provider is obliged to keep the goods specified in the agreement period and return them all in good quality. The owner is obliged to take the goods from the provider at the end of the storage period.

The main advantage of concluding an outsourcing agreement for the storage of goods is to reduce the cost of implementing this service. Outsourced storage and warehousing allow you to reduce time and financial costs at all distribution and logistics chains stages.

Conclusion: What are the benefits of storage and warehousing services for companies?

Storage and warehousing services can be profitable for a business for many reasons. Outs outsourced storage and warehousing will solve the problem if a company does not have a warehouse and cannot rent and maintain it. Thus, a company can be sure of optimal storage conditions and pay only for space occupied by its freight and necessary services. If a business needs space and additional resources during the high season, the service closes this issue. Thanks to outsourced storage and warehousing a company does not worry about warehouse management, staff recruitment, equipment purchase, etc. Transferring these issues to the logistics provider allows a business to focus on its development.

To be sure of freight safety, a company should responsibly select a logistics provider. It is also necessary to pay attention to the 3PL warehouse. The premises should be located near highways, have a reliable security system and special equipment. Availability of a Warehouse Management System would be a great advantage, as it affects the efficiency and speed of warehouse processes.

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